Buy an NFT? Ask these five questions before investing
NFT price values before you dip your toes in. An NFT trade born out of this inexperience results in losses.
Why should you know about NFT price value before investing?
NFTs are popular online commodities. When they are bought and traded over time, there is the possibility of recurring income. NFT valuations are critical and skyrocket due to fanaticism, royalty economics and scarcity rules.
So what can an NFT price value tell you?
Estimating the price value of the NFTs will help us uncover the following.
How small is NFT?
With a scarce NFT, the project tends to attract more. This increases the demand for the collection and the price. The best example of this is the BAYC collection and ApeCoin, which has created more demand in the community.
What is the rarity of the NFT in the collection in question?
Forget the collection as a whole. The rarity of each NFT in a collection also plays a key role in the increased pricing of the collection itself.
What is the use of an NFT collection?
Blockchain technology leveraged this use of NFTs effectively with NFT tickets. Most NFTs are used to unlock entry to events or gain the privilege of getting a hot seat in an activity. VeeFriends, GainForest and World of Women are some examples of NFTs with increasing prices; some are even sold out as they were created in tandem with an event like an NFT ticket.
Whether the price of the NFT in question has increased over time or not?
Monitor NFT’s historical value to understand its appreciation over time. An NFT price valuation can help you with these details. It can also help with price intervals (upper limit and lower limit values), which indicate what will be the maximum and minimum value an NFT can reach.
Whether NFT is involved in laundry trade or not?
Estimating the NFT’s price value can also reveal whether the collection has been washed and traded or not. Wash trading tampers with credibility, which in turn affects the liquidity of NFTs. This affects your credit options with decentralized financing through NFTs.
With all the above in mind, you can analyze the return of investing in NFTs, understand the resale value of the collection, take advantage of credit opportunities with Defi and plan for future investment with NFTs.
So, as NFT enthusiasts, stay intuitive and be aware of NFT price before taking advantage of them.
Vijay Pravin Maharajan is the founder and CEO of bitsCrunch
